China must cut corn prices to clear stockpile

January 11, 2016 at 5:04 pm

China must lower corn prices to reduce its massive corn stockpile and curb imports of corn substitutes including barley, sorghum and distillers’ grain, state media quoted a senior agricultural official as saying.

Chen Xiwen, deputy director of the Central Rural Work Leading Group, said China needed to modify its reserve-based crop price support mechanism to curb the mounting grain stockpile, state-run China Daily newspaper reported on Saturday.

The Central Rural Work Leading Group is the China’s top decision maker on rural policy.

China could still lower the corn support price this year to reduce the reserve, but measures must be taken to protect farmers’ interests so that the country will not suffer a major drop in grain production, the paper reported Chen telling a forum on rural affairs in Beijing.

“There are no policies that can remain unchanged for more than 10 years,” China Daily quoted Chen as saying. “If we do not reform the mechanism, there will be more problems on the way.”

Chen’s remarks come as China, the world’s second-largest corn consumer, adds to already bulging state reserves of the grain.

Industry sources told Reuters previously that Beijing plans to cut local corn prices for a second year as it works to rekindle stalled demand from its crisis-hit grain processors and whittle down the world’s biggest corn stockpile.

Chen said China should also take measures to ensure that the country’s corn stockpile will not increase any further, as part of measures to clear the stockpile.

“We must also change the situation in the Northeastern provinces where the state-owned warehouses are absorbing all the corn stockpile,” he was quoted as saying.

Chen said China must have a variety of market entities to compete in the storage of corn in the northeastern provinces, the country’s major corn producing area.

Separately, Xu Shaoshi, chairman of the National Development and Reform Commission (NDRC), the top planning agency, said China should “actively and steadily push forward” the reform of China’s corn storage system, according to a statement on the State Administration of Grain’s website.